Share Subscription Agreement Template for Malaysia

A Share Subscription Agreement under Malaysian law is a legally binding contract that documents the terms and conditions under which an investor agrees to subscribe for new shares in a company. The agreement, governed by Malaysian corporate law including the Companies Act 2016, sets out the subscription price, number and class of shares, payment terms, and completion mechanics. It includes representations and warranties from both parties, conditions precedent to completion, and various protective provisions. The document must comply with Malaysian securities regulations and may require approval from relevant regulatory authorities, particularly for foreign investments or public companies.

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What is a Share Subscription Agreement?

The Share Subscription Agreement is a crucial document used in Malaysian corporate transactions when a company seeks to issue new shares to investors in exchange for capital investment. It serves as the primary legal instrument documenting the share subscription process, ensuring compliance with the Companies Act 2016 and other relevant Malaysian regulations. This agreement is typically used in various scenarios including startup funding rounds, corporate restructuring, strategic investments, and capital raising exercises. It details critical aspects such as valuation, share rights, investment conditions, and investor protections. The document must address specific Malaysian legal requirements, including foreign investment restrictions if applicable, and may require regulatory approvals depending on the transaction size and nature. The agreement protects both the issuing company and the subscriber by clearly defining their rights, obligations, and the process for completing the share subscription.

What sections should be included in a Share Subscription Agreement?

1. Parties: Identification of the Company issuing shares and the Subscriber(s)

2. Background: Recitals explaining the context of the share subscription and the company's current share capital structure

3. Definitions and Interpretation: Key terms used throughout the agreement and rules of interpretation

4. Subscription of Shares: Details of the shares being subscribed for, including number, class, and price per share

5. Consideration: Payment terms, method, and timing for the subscription amount

6. Conditions Precedent: Prerequisites that must be satisfied before completion of the subscription

7. Completion: Timing, location, and mechanics of the completion process

8. Company's Representations and Warranties: Company's statements about its legal status, share capital, and business

9. Subscriber's Representations and Warranties: Subscriber's statements about their capacity and authority to enter into the agreement

10. Covenants: Ongoing obligations of the parties post-completion

11. Confidentiality: Obligations regarding the protection of confidential information

12. Notices: Process for formal communications between parties

13. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, and entire agreement

What sections are optional to include in a Share Subscription Agreement?

1. Tag-Along Rights: Include when minority shareholders need protection to sell their shares alongside majority shareholders

2. Drag-Along Rights: Include when majority shareholders need the right to force minority shareholders to join in a sale

3. Anti-Dilution Protection: Include when investors need protection against future share issuances at lower valuations

4. Board Appointment Rights: Include when subscribers are to have rights to appoint directors

5. Multiple Closing Mechanics: Include when the subscription will occur in multiple tranches

6. Foreign Investment Provisions: Include when the subscriber is a foreign entity requiring compliance with Malaysian foreign investment laws

7. Regulatory Compliance: Include specific provisions when the subscription requires regulatory approvals

8. Pre-emptive Rights: Include when existing shareholders are to have rights to participate in future share issuances

What schedules should be included in a Share Subscription Agreement?

1. Schedule 1 - Share Capital Structure: Details of the company's share capital before and after the subscription

2. Schedule 2 - Conditions Precedent: Detailed list of all conditions that must be satisfied before completion

3. Schedule 3 - Completion Obligations: Detailed list of actions and deliverables required at completion

4. Schedule 4 - Company Warranties: Comprehensive list of company warranties

5. Schedule 5 - Disclosure Letter: Company's disclosures against the warranties

6. Schedule 6 - Corporate Information: Key corporate details including directors, shareholders, and material contracts

7. Appendix A - Form of Board Resolution: Template board resolution approving the share issuance

8. Appendix B - Form of Shareholders' Resolution: Template shareholders' resolution if required for the share issuance

9. Appendix C - Form of Share Certificate: Template share certificate to be issued to the subscriber

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Malaysia

Publisher

Genie AI

Cost

Free to use

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